How a Living Trust Handles Property in More Than One State
A surprising number of our clients own real estate somewhere besides California. A cabin near Tahoe on the Nevada side, a rental condo in Arizona, the family home in another state that became a rental after a parent passed, a place in Texas near the grandkids. The portfolio grows, one reasonable decision at a time, and then one day it creates a legal problem most owners have never heard of.
The two-probate problem
Probate is run by the courts of the state where real estate sits. California courts can handle everything you own here, but they have no authority over a deed recorded in Arizona. So when someone dies owning real property in two states with no trust, the family typically faces the main probate in California plus a second proceeding, called ancillary probate, in the other state. Each case has its own court, its own timeline, its own filing fees, and usually its own local attorney.
One death, but two court cases and two sets of professional fees. Families who have been through it describe the second case as the more maddening one, because it is smaller, farther away, and entirely avoidable.
Photo by Megan Clark on Unsplash
Why a trust solves it
Real estate deeded into a revocable living trust is owned by the trust rather than by you personally at death. There is nothing titled in your individual name for any court, in any state, to administer. Your successor trustee follows the trust's instructions and transfers or sells each property directly, whether it sits in Mission Viejo or Michigan.
One trust can hold property in all fifty states. There is no need for a separate trust per state, which is a myth we hear regularly. What each out-of-state property does need is its own deed, prepared to that state's requirements and recorded in that county, transferring it into your California trust. This is part of the funding work, and it is the step most do-it-yourself plans skip.
A checklist for multi-state owners
If you own real estate in more than one state, a complete plan usually involves:
A revocable living trust as the owner of record for every property
A new deed for each property, drafted to the recording standards of its respective state and county
A review of how each property is characterized, since marital property rules differ between states
Insurance and lender notifications so policies and mortgages stay aligned with the new title
For rentals, a conversation about whether an LLC should hold the property inside the trust for liability protection
A little more detail on that last point: trusts solve the court problem, but an LLC addresses a different one, which is shielding your other assets if a tenant is injured at the rental. Many landlords use both, with the trust owning the LLC. Whether the extra structure earns its annual costs depends on the property and the state, which is a judgment call to make with counsel.
The tax angle in 2026
Federal estate tax has exited the conversation for most families. As of 2026, the estate and gift tax exemption is $15 million per person, so multi-state planning today is mostly about avoiding duplicate courts rather than avoiding tax. California-specific rules still apply to California property, including Proposition 19's limits on property tax transfers between parents and children, which we covered in The Impacts of Prop 19.
However, a handful of other states also impose their own state-level estate or inheritance taxes on property located there, which is worth checking for each state where you own.
Frequently asked questions
What happens if I die owning property in two states?
Without a trust, your estate typically faces probate in your home state plus an additional proceeding in each other state where you own real property, each with its own court, timeline, and fees.
Do I need a separate trust for each state where I own property?
One revocable living trust can hold real estate in every state. Each property needs its own deed transferring it into the trust, prepared under that state's recording rules.
Can my California trust own my out-of-state rental?
Yes, absolutely. Separately, many landlords also place the rental in an LLC for liability protection, with the trust owning the LLC. An attorney can weigh whether the added structure makes sense for your property.
What is ancillary probate?
Ancillary probate is an additional court proceeding in another state, required to transfer real estate located there when the owner dies holding title in their own name. Titling the property in a trust avoids it.
Does the federal estate tax affect my out-of-state property?
For most families, it does not. The federal exemption is $15 million per person as of 2026. Some individual states levy their own estate or inheritance taxes on property located there, so check the rules for each state where you own.
If your holdings cross a state line, the fix is straightforward and much easier done now. Laurel Trust Law LLP prepares multi-state trust plans, including the deed work, from our Mission Viejo and Studio City offices at flat-fee pricing. Book a consultation and bring your property list.